Bitcoin Trading Alert: Not Enough Bearish Clues for Bitcoin

Cutting right to the chase: we don't support any short-term positions
in the Bitcoin market now.

CNBC relayed an e-mail it had
gotten from Roger Ver, Bitcoin millionaire:

Bitcoin, the controversial cryptocurrency, finally may be back in investors'
good graces: It's up more than 80 percent from its April lows on a wave
of good news and wider acceptance.

"Recently more and more people are realizing how much of a world-changing
technology bitcoin is," Roger Ver, the bitcoin investor sometimes known
as "Bitcoin Jesus," wrote in an email to CNBC. "We will see more and more
of this until each bitcoin is at least tens of thousands of dollars each.
I think this will happen sooner than any of us expect."

(...)

And the latest news of bitcoin acceptance comes from a potentially unlikely
source: Rapper Curtis "50 Cent" Jackson, who is reportedly accepting the
currency for his new album "Animal Ambition."

"The positive news never stops," Ver said.

There's no apparent reason for the recent surge in the price of Bitcoin but
the mere fact that the price has gone up inspires more positive comments in
the mainstream media. While one cannot be certain that Bitcoin will actually
trade at "at least tens of thousands of dollars," the underlying potential
of the currency makes it particularly interesting.

This might be the case even more now since it looks like we've just seen a
major breakout and the medium-term outlook is tilted to bullish.

On BitStamp, Bitcoin continued the appreciation pattern yesterday, however,
on falling volume. The move itself had rather bearish implications but not
bearish enough, especially given the recent volatile days followed by appreciation.

Today, the volume has picked up decidedly - it's already higher than it was
yesterday (this is written before 10:00 a.m. EDT). What is more important,
the exchange rate has gone down more than 4% so far. Recall what we wrote yesterday:

Because of the fact that we've just seen a strong period of appreciation,
we might expect a pause in the nearest future, possibly a move back to
$600 which would be followed by more appreciation.

This is what we're seeing today. Bitcoin moved to around $620 before stabilizing.
If we don't see more depreciation in the next few days, this might be a buying
opportunity.

On the BTC-e long-term chart,
we're seeing a move back to the declining trend line. The line, however, hasn't
been touched. What is more important, Bitcoin hasn't moved below $600 so far.

This confirms what we wrote yesterday and makes it all the more up to date:

Right now it seems that the medium-term outlook might be bullish. As
far as the short-term outlook is concerned, we expect to see some deterioration
shortly, possibly to the level of $600. If the bullish medium-term outlook
holds, this would be followed by more moves up.

If today's action is followed by more appreciation or we don't see a move
below $600 in the next days, we might have both a short-term and medium-term
buying opportunity.

Summing up, in our opinion no short-term positions should be kept in
the market now.

Trading position (short-term, our opinion): no positions. If there's
no more depreciation in the following days, we might have a buying opportunity.

Mike is a quantitative analyst focused on the economic reality, not theoretical
models. His investment thinking is grounded on empirical evidence and common
sense.

A holder of 2 master's degrees, in quantitative methods and finance, he researches
economic uncertainty, portfolio management, and investor behavior.

Mike joined Sunshine Profits in
2009. He develops innovative investment
tools, verifies usefulness of popular techniques, and provides thorough
internal research. His quantitative and financial background, along with experience
in the gold market and personal interest in bitcoin led to the launch of our Bitcoin
Trading Alert service.

Disclaimer: All essays, research and information found above represent
analyses and opinions of Mike McAra and Sunshine Profits' associates only.
As such, it may prove wrong and be a subject to change without notice. Opinions
and analyses were based on data available to authors of respective essays at
the time of writing. Although the information provided above is based on careful
research and sources that are believed to be accurate, Mike McAra and his associates
do not guarantee the accuracy or thoroughness of the data or information reported.
The opinions published above are neither an offer nor a recommendation to purchase
or sell any securities. Mr. McAra is not a Registered Securities Advisor. By
reading Mike McAra's reports you fully agree that he will not be held responsible
or liable for any decisions you make regarding any information provided in
these reports. Investing, trading and speculation in any financial markets
may involve high risk of loss. Mike McAra, Sunshine Profits' employees and
affiliates as well as members of their families may have a short or long position
in any securities, including those mentioned in any of the reports or essays,
and may make additional purchases and/or sales of those securities without
notice.